CNBC's Eunice Yoon joins 'The Exchange' to discuss concerns around China's electric vehicle (EV) industry.

Beijing

China's electric vehicle (EV) industry is experiencing growing concerns over aggressive price competition, with market leader BYD significantly reducing prices and outperforming global competitors like Tesla. The price wars have prompted warnings from industry executives, who draw parallels to past crises in other sectors, and have led to practices such as artificially inflating sales figures through 'zero mileage used cars.'

Local government incentives are enabling many carmakers to continue operating despite financial pressures, complicating the possibility of a market shakeout. These dynamics are not only affecting the domestic market but also have implications for global competitors, as Chinese companies use low prices to gain international market share, potentially distorting the global automotive industry.

China's EV industry concerns

Meantime, shares of BYD are climbing in Asia today, up more than 50 percent this year now, which is outperforming Tesla. BYD launching its new SEAL 6 vehicle for just $15,000. Again, that's about half the cost of a Tesla Model 3 in that country. But ongoing price wars in China, these EV price wars, have some insiders worrying their whole sector could end up facing a crisis of epic proportions. Eunice Yoon has that story. Fears are growing in China that its EV industry is in a race to the bottom. Outside of China, this country is often accused by its trading partners of flooding markets with cheap Chinese EVs. These days, similar accusations are flying within China about China, raising concerns about financial stress in the industry. The company drawing the most fire is China's market leader, BYD. BYD slashes prices by as much as 34 percent. This mini hatchback, the SEAL, now costs only $7,700. The intense price war has sparked high-profile auto executives to sound the alarm, with the head of Great Wall Motor calling the industry unhealthy. In a local media interview in late May, Chairman Wei Jianjun drew parallels to China's moribund property sector and its now-defunct poster child, developer Evergrande. An Evergrande-like crisis already exists in the automotive industry, he says. It just hasn't erupted yet. BYD has dismissed Wei's comment as alarmist. Sellers at this used car market see another sign of strain. The authorities are looking into a phenomenon known as zero mileage used cars. This is when cars are registered and plated and then marked as sold, but they haven't ever been driven. Used car salesman Ma Hui is worried where all the competition leads. All of us were losing money last year, he says. There are too many companies making too many new energy cars. The sellers told us that that tactic of zero mileage used cars is meant to help car companies and dealerships artificially inflate their sales volumes. It's one of the reasons why the official Communist Party paper, the People's Daily, said that the price war leads nowhere. Kelly? Eunice, I'm so glad that you're diving into this story. So it's not just in China either, where there are implications. Look, whatever happens to the industry domestically, it's great for consumers, frankly, in the meantime. But for global auto producers, right? I mean, if you're a major European carmaker, if you're Tesla, how are you supposed to compete with this? Yeah, it's very difficult for a lot of these carmakers to compete. And but it's I think it's questionable as to whether or not we're going to see an end to this. I've talked to a couple of people who said, you know, in theory, you would see a shakeout of the industry here. But the industry operates quite differently. The incentives are different. A lot of the car companies have local governments behind them that are financially helping them for reasons because they want to have jobs because they have want to have bragging rights that they have their own car company. But then the incentives are that they allow these producers to continue to produce and then sell on to the international market rather than go bankrupt. And then, of course, the whole model that BYD is approaching is something that we see quite often with Chinese companies. And that is depressing prices a lot in order to gain market share. But by doing so, of course, that distorts a lot of the market for other players.

A powerful magnitude 8.8 earthquake off Russia's Far Eastern Kamchatka Peninsula triggered tsunami waves of up to 16 feet nearby, and sparked evacuation orders in Japan, Hawaii and across the Pacific on Wednesday (July 30).

Hawaii

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New York

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Washington

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London

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Kyiv

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Jerusalem

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Bogotá

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Moscow

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Zaporizhzhia

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Traverse City

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Bangkok

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Kuala Lumpur

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Stockholm

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Riedlingen

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Athens

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Garfield Township

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Denver

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Edinburgh

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Tel Aviv-Yafo

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